Answer:
It will take 3 years and 219 days to cover for the initial investment.
Explanation:
Giving the following information:
Annual cash flow= 13,000 - 8,000= $5,000
Initital investment= $13,000
<u>The payback period is the time required to cover for the initial investment:</u>
Year 1= 5,000 - 13,000= -8,000
Year 2= 5,000 - 8,000= -3,000
Year 3= 5,000 - 3,000= 2,000
<u>To be more accurate:</u>
(3,000/5,000)*365= 219 days
It will take 3 years and 219 days to cover for the initial investment.
